The objective of this short note is to re-evaluate the solution given by Palley (2002) for the inconsistency problem in BoP-constrained growth models. I show that once we distinguish the concepts of natural and warranted rates of growth that over-determination problem appears again, requiring the introduction of the level of real exchange rate in the formal structure of BoP models in order to be solved.
Luciano Dias Carvalho and José Luís Oreiro
André de Melo Modenesi, Rui Lyrio Modenesi, José Luis Oreiro and Norberto Montani Martins
This article aims at analysing the relationship between conventions and monetary policy using both the post-Keynesian and the French-conventions-school approaches, treated as complementary; and stressing the design of monetary policy frameworks (for example, inflation targeting) and the setting of interest rates as phenomena highly governed by conventions. The Brazilian monetary policy after the mid 1990s – marked by the highest real interest rates in the world – will be used as a case study.